6 out of 10 Gangnam apartments sold by non-Gangnam residents

The number of non-Gangnam residents buying an apartment in the affluent areas of southern Seoul known as Gangnam has remarkably increased in recent years.

According to Korea Appraisal Board (KAB) data analysis by AsiaToday on Thursday, 61 percent (12,363 cases) of total apartment purchases (20,339 cases) in Gangman three Districts, individually known as Gangnam-gu, Seocho-gu, and Songpa-gu and often collectively referred to as "Gangnam", between January and July was bought by non-Gangnam residents.

Investment by non-Gangnam residents was prominent as six out of ten Gangnam apartments were bought by non-Gangnam residents. In particular, non-Gangnam residents living in Seoul bought apartments in Gangnam more than ever, further raising apartment prices in Gangnam.

It's an 8 percent increase compared to the fact that 53% of total apartment purchases in Gangnam three Districts was made by non-Gangnam residents last year.

The rate of apartment purchase in Gangnam three Districts by non-Gangnam residents living in Seoul expanded to 40.3 percent this year from 32.4 percent last year. In the same period, the number of Gangnam apartment purchases by Gangnam residents amounted to only 7,976 cases (39.2%).

The rate of non-Seoul residents who bought apartments in Gangnam was about 20 percent during this period, similar to last year.

Experts pointed out that more people flocked to Gangnam largely due to soaring house prices and government regulations.

As apartment prices in Seoul apart from Gangnam region have risen sharply by hundreds of millions of won last year, non-Gangnam residents living in Seoul turned their eyes to Gangnam with spare money. Besides, there were enough Gangnam homes for sale in the first quarter ahead of the government's enforcement of higher taxes on owners of multiple homes.

"House prices in Seoul have risen sharply last year and multi-home owners have sold their properties in Gangnam to avoid higher taxes on them in the first quarter, attracting non-Gangnam residents to purchase houses in Gangnam," said Kim Kyu-jung, an analyst at NH Investment & Securities Co..

""Polarization is ongoing in Seoul as well as more non-Gangnam residents are eager to buy an apartment in Gangnam," said Ham Young-jin, the chief of Zigbang Big Data Lab.

On the other hand, it has been found that non-Seoul residents, who have not been able to cope with soaring house prices in Seoul, failed to increase the number of apartment purchases in Gangnam due to high prices.

"House prices in Seoul are just too high, blocking non-Seoul residents to purchase apartments in the region," said Byun Sae-il, the head of Real Estate Market Research Center at the Korea Research Institute for Human Settlements (KRIHS).

Housing prices in Gangnam is expected to move upwards in the second half of the year as many people still want to flock to Gangnam.

"Housing prices in Gangnam will continue to rise until autumn, but it is uncertain whether this trend will continue as housing prices are very high and the volume of transactions is decreasing," said Ham.